Apple Tops Saudi Aramco As Most-Valued Company: ETFs in Focus
Apple AAPL has now earned the status of the world’s most-valuable publicly traded company, topping the state oil giant Saudi Aramco. The iPhone maker now sits with a market valuation of $1.84 trillion while Saudi Aramco had $1.76 trillion as of Jul 21. Apple also announced a 4-for-1 stock split. This is the technology giant’s first stock split since 2014. Apple is up 44.7% this year.
Sizzling third-quarter earnings led to this success for Apple as the stock gained 10.5% on Jul 31, reflecting earnings results. The company’s third-quarter fiscal 2020 earnings and revenues beat estimates. Earnings per share came in at $2.58, beating the Zacks Consensus Estimate by 55 cents and improving 18% from the year-ago quarter.
Revenues rose 11% year over year to $59.68 billion and breezed past the estimate of $51.93 billion. Robust results were driven by strong growth across all geographic segments and major product categories. In particular, iPad and Mac sales were strong due to the pandemic, which has resulted in remote working and learning (read: Apple ETFs to Buy on Blowout Q3 & Stock Split News).
iPhone sales rose 2% to $26.4 billion while services revenues, comprising iTunes, Apple Music, iCloud, Apple Pay and Apple Care, climbed 14.8% year over year to $13.16 billion. Revenues from Wearables, Home and Accessories, which include Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, soared 16.7% to $6.45 billion while iPad and Mac revenues increased 32% and 22.4%, respectively.
Will Apple Continue to Soar?
Going by valuation metrics, P/E (ttm) of AAPL is 32.3 times versus the industry-average of 26.5 times. Forward P/E of AAPL is 34.2 times versus the industry score of 23.0 times. Though these measures point to a higher valuation of Apple than the industry, a higher P/E is always not a sign of worry. It shows investors’ confidence in a particular stock among the bunch.
Investors should note that return-on-equity of Apple is 70.7%, higher than industry average of 52.5%. Plus, both return-on-assets and return-on-capital of Apple are higher than the industry measures. The estimated 3-5-year EPS growth of Apple is now 11.0% versus 7% of the industry measure.
The above numbers explain why Apple shares have possibilities to soar higher. Investors should note that the AAPL stock has a Zacks Rank #3 (Hold).
ETFs to Tap
Given this, investors could consider the following ETFs with the largest allocation to Apple. These funds have Apple as the top or second firm with a double-digit allocation and sport a Zacks Rank #1 (Strong Buy) with a Medium risk outlook (read: Warren Buffett Bets Big on Apple: Buy These ETFs).
iShares Dow Jones US Technology ETF IYW – APPL is at the helm with 20.39% weight. The fund has a Zacks Rank #1.
Select Sector SPDR Technology ETF XLK – APPL holds the top spot with 21.59% weight. The fund has a Zacks Rank #1.
Vanguard Information Technology ETF VGT – APPL occupies the first location with 19.44% weight.
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Apple Inc. (AAPL): Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.